Section 254(2) states that ITAT is unable to correct any errors that are not immediately apparent from the record
Fact and issue of the case
The Department has filed a Miscellaneous Application against ITAT, Jaipur Bench order dated 12-05-2022 for rectification of mistake u/s 254(2) of the Income Tax Act, [ here in after as Act ] by praying therein as under:-
‘’The Hon’ble ITAT vide order dated 12/05/2022 in ITA No. 37/JP/2022 in the case of Suman Solanki, PAN: AGCPS3462N for AY 2018-19 has allowed the appeal of the assessee.
The ADIT (CPC) while passing an order u/s 143(1) of the Act made an addition of ₹42,22,723/- u/s 2(24)(x) read with section 36(1)(va) of the Act on account of late deposit of the “Employees contribution towards ESI and PF after the expiry of due date as specified in the relevant statutes. Aggrieved with the same the assessee filed appeal before the Id. CIT(A) confirmed the addition of 242.22/723/- made by the AO u/s 36(1)(va) of the Act.
Further, aggrieved with the decision of the Id. CIT(A) the assessee preferred appeal before Hon’ble ITAT. The Hon’ble ITAT vide appellate order dated 12/05/2022 received in this office on 18/10/2022, in the appeal No.37/JP/2022 has allowed the appeal of the assessee by deleting the addition of 242,22.723/-made by the AO u/s 36(1)(va) of the Act holding that the assessee paid the same before filing of return of Income u/s 139(1) of the Act. The Hon’ble ITAT has placed reliance upon the Coordinate Banglore Bench in the case of Shri Gopalkrishna Aswini Kuamr Vs. ACIT wherein the Hon’ble Banglore Bench placed reliance upon the Hon’ble Karnataka High Court in the case of Essae Teraoka Pvt Ltd. and applied the provision of section 36(1)(va) read with section 438 as amended by the Finance Act, 2021 by inserting explanation 2 is prospective and not retrospective which is applicable w.ef AY-2021- 2022 and the instant case pertains to the AY-2018-19.
The decision of the Hon’ble ITAT is found not acceptable as the Hon’ble Supreme Court vide Civil appeal No. 2833 of 2016 dated 12.10.2022 in the case of M/s. Checkmate Services P Ltd. vs. Commissioner of Income Tax, has decided that it is essential condition for the deduction that such amount is deposited on or before the due date and incompliance to the CBDT circular No.68 [F.No.245/17/71-A&PAC), dated 17.11.1971 which states that a mistake arising as a result of a subsequent interpretation of law by Supreme Court would constitute a mistake apparent from record and the same may kindly be rectified under section 254(2) of the Act by recalling the appeal order and deciding the same on merits.
During the course of hearing, the ld. AR opposed the Misc. Application of the Department with following written submission
‘’Assessee’s written submission
Brief General Facts: The assessee is engaged in the business of housekeeping and manpower supply services to hospitals. The assessee filed ROI on dated 19.12.2018 declaring total income of Rs. 80,35,080/-. The ROI was processed and assessment was completed vide intimation u/s. 143(1) dt. 31.10.2019, which are processed by the DCIT, CPC, Bangalore at total income of Rs. 1,22,57,800/- while disallowing the Employees contributions towards PF/ESI of which Rs. 42,22,723/- beyond the due dates under the PF/ESI Act of S.36(1)(va) r.w.s. 2(24)(x) of the Act and refusing to apply the application of the section 43B of the act. The disallowance was confirmed also by the CIT (A), Delhi (NFAC) wide its order dated 29.03.2022 against which, the assessee approached the Hon’ble ITAT. The Hon’ble ITAT vide its order dated 12.05.2022 in ITA no. 124/JP/2022, after an elaborate discussion and following several decisions and in particular those also wherein such disallowance was made by way of adjustment u/s 143(1), in para 7, deleted the disallowance.
Against the said ITAT Order dt. 12.05.2022, Miscellaneous Application is filed on dt 15.02.23 contending that the said ITAT order was not acceptable to the revenue because the Hon’ble Supreme Court in Civil Appeal No. 2833/2014 dt. 12.10.2022 in case of M/s. Checkmate Services Pvt. Ltd v CIT has held that the essential condition for the deduction was to make deposit on or before the due dates and taking support of CBDT circular no 68 dt. 17.11.1971 alleged that it was mistake arising as a result of subsequent interpretation of the law by the Hon’ble Supreme Court which is a mistake apparent and prayed for rectification u/s 254(2) of the Act, by recalling the subjected ITAT order.
Observation of the court
We have heard both the parties and perused the materials available on record including the judgement passed by Hon’ble Supreme Court dated 22-10-2022 in the case of M/s. Checkmate Services Pvt. Ltd. vs CIT-1 in Civil Appeal No. 2833/2016. The question arises as to whether there is an apparent mistake in the order of the Tribunal passed by it in the case of the assessee vide its order dated 12-05-2022. Section 254(2) empowers the Tribunal to rectify any mistake apparent from the record, amend any order passed by it under sub-section (1) and shall make such amendment, if the mistake is brought to its notices by the assessee or the Assessing Officer. The Bench also noted that the Department has simply relied upon the Judgement of Hon’ble Supreme Court in Civil Appeal No. 2833/2016 in the case of M/s. Checkmate Services Pvt. Ltd. (supra) but it has not mentioned that there is apparent mistake in the order of the ITAT passed in the case of Shri Suman Solanki (ITA No. 124/JP/2022, A.Y. 2018-19) dated 12-05-2022 wherein some amendment/ rectification is required. The order was passed by the Bench in the case of the assessee on 12-05-2022 in accordance with that time, situation and prevailing interpretation of law by various Hon’ble High Courts [ including binding judgment of jurisdictional High Court ] and ITAT Benches across the country wherein the Bench does not find any infirmity or apparent mistake. In such a situation, the Bench feels hesitation to concur with the submission of the Department to amend its order. Hence, the Misc. Application filed by the Department is dismissed. 4.0 In the result, the Misc. Application filed by the Department is dismissed.
Order pronounced in the open court on 17 /07/2023
Conclusion
In the result, appeal of the assessee is allowed and ruled in favour of the assessee
Read the full order from here
DCIT-Vs-Suman-Solanki-ITAT-2
